Investing in rental properties can be exciting at first because you’re eager to make money. You’ve done your research and know that rental properties are a great source of passive income. What you don’t know is the amount of work it will take to manage and maintain that property.
Check out the tips below to learn more about property management.
Things to Consider Before Investing
Real estate is a capital-intensive industry. Therefore, before you begin your investment, check your finances. Do you have enough money to complete the project and have some left for handling emergency repairs and maintenance? Sit down with a financial advisor from your bank and analyze the situation.
Look at the current market demand. Are people actively looking for rental properties? Which areas have the highest potential? If you’re going to invest in rental property, choose a market with high demand.
Alternatively, you can choose an area that is expected to grow in the future. Such investments are worth it because you can buy the investment property at a bargain price and charge your tenants premium rent as soon as the demand rises.
Pricing the Property
The rent you charge will depend on the mortgage repayment and vacancy costs. You cannot charge a low price because you have mortgage commitments. At the same time, you cannot charge high rent because it will scare away customers.
Compare the rent of similar houses in your area. Other factors to consider are the size and availability of social amenities. If your property is slightly bigger and has more social amenities, you can charge a rent higher than the average.
The age of the property also determines the amount of rent you can charge. If the house is old and has undergone minor renovations, you won’t be able to charge a lot because tenants prefer new homes.
Once the house is ready for occupation, you have to advertise to get tenants. Use local ads to find interested tenants nearby. Post the property online to increase visibility. You should include the price and a detailed description in the post. Displaying the price helps you find serious tenants.
In the description, talk about the property size and amenities. Describe what sets you apart from other rental properties.
Use professional photos to showcase the property. Hire somebody that has taken real estate photos before. Professional photos highlight the best features of the property.
Finding Quality Tenants
Not everybody that comes to view the house is a worthy tenant. There are some people that will be a nightmare when it comes to collecting rent. They’ll always give you excuses for failing to pay the rent on time.
Screen all potential tenants before giving them the lease form. You have to check that person’s rental history to make sure they are not bad tenants. Another thing you should confirm is the applicant’s source of income. Call the employer to confirm the person works there. Next, check the person’s records with law enforcement. Have they ever been convicted of a crime? You don’t want somebody that can threaten you if they fail to pay their rent.
Once you’re satisfied with an applicant, call them for an in-person discussion. Ask them about their expectations. Then, tell them what you expect. Be clear and transparent in communication. Tell them that you expect them to pay the rent and service charges on time. Signing the lease agreement means they’ve accepted the rules.
Self-Management versus Hiring a Property Manager
Managing a rental property is demanding and exhausting. You have to be available at all times in case of an emergency. Tenants that do not pay their rent on time can be wearying. But there is a silver lining in all these. When you manage your property, you get to keep all revenues and do what’s best for your tenants.
On the other hand, a property manager will save you from the constant headaches of collecting rent. They will be there on your behalf. However, they won’t be as caring as you when managing the property. They may use substandard products for repairs and maintenance because they want to save money.